Glossary

Open Outcry

See Also:

Open: Open is the period at the beginning of the trading session officially designated by the exchange during which all transactions are considered made "at the open."

Bid: Bid is an expression of willingness to buy a commodity at a given price. This is an offer to buy a specific quantity of a commodity at a stated price. Bid is opposite to Ask. Bid price is the price level at which a trader is ready to buy an offered commodity.

Commodity: A commodity, as defined in the Commodity Exchange Act, includes the agricultural commodities enumerated in Section 1a(4) of the Commodity Exchange Act, 7 USC 1a(4), and all other goods and articles, except onions as provided in Public Law 85-839 (7 USC 13-1), a 1958 law that banned futures trading in onions, and all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in.

Exchange: A central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options contracts or securities. Exchanges include designated contract markets and derivatives transaction execution facilities.

Futures: Futures (also called Futures Contract) is a legally binding agreement to buy or sell a commodity or financial instrument at a later date. Futures contracts are normally standardized according to the quality, quantity, delivery time and location for each commodity, with price as the only variable.

Offer: Offer is an indication of willingness to sell futures contract at a given price. Offer is opposite of bid, the price level of the offer may be referred to as the ask.

Pit: Pit (also referred to as a ring) is the area on the trading floor where trading in futures or options contracts is conducted by open outcry. It is a specially constructed area on the trading floor of some exchanges where trading in a futures contract or option is conducted. On other exchanges, the term ring designates the trading area for commodity contract.

Public: In trade parlance, Public is non-professional speculators as distinguished from hedgers and professional speculators or traders.

Ring: Ring is a circular area on the trading floor of an exchange where traders and brokers stand while executing futures trades. Some exchanges use pits rather than rings.

Trader: Trader is a merchant involved in cash commodities or a professional speculator who trades for his own account and who typically holds exchange trading privileges.

Trading Floor: Trading Floor is a physical trading facility where traders make bids and offers via open outcry or the specialist system.

Transaction: Transaction is an entry or liquidation of a trade.

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